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What Are No-fault Car Insurance Plans and Death Benefits?

The no-fault auto insurance system or personal injury protection (PIP) is intended to cover some or all of the costs incurred during a car accident. These costs include lost wages and medical expenses. It also pays death benefits in the form of funeral and burial expenses. The payments are made regardless of who is responsible for the accident.

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Some death benefits are classified as survivor’s benefits and paid to the dependents of the deceased person (decedent). However, in order to get paid, the decedent’s death should be the result of an auto accident when he or she is behind the wheel.

Expenses Related to Funeral and Burial

Most no-fault insurance plans provide coverage for the funeral and burial expenses of an insurer who was accidentally killed while driving the motor vehicle. Some states also pay for medical expenses in addition to the above expenses but within the policy limits.

Survivor’s Benefits

Under the no-fault death benefits, a set amount of money is paid to the dependents or relatives of the decedent involved in the car accident. This amount is determined by the no-fault law of the particular state. However, these benefits are only paid if the death occurs due to an auto accident. Any intentional act that results in the death of the insuree makes the survivors ineligible to receive the benefits.

Lost Income

The no-fault statutes allow the payment of lost income and other expenses to the survivors of the decedent involved in a car accident. This payment is made in two ways. In the first approach, the survivors will be paid the full wages earned by the decedent and future payments had the decedent was alive. As per the second approach, the survivors are paid only the amount lost by the decedent between the injury and death. No future wages are covered under this approach.

Pension Payments

The pension payment, also known as survivors’ economic benefits, is a form of income loss and disability benefits under a no-fault insurance system where the insuree who is not fatally injured receives payments to compensate for the lost real or material goods had he or she wasn’t injured.

Replacement Services

This coverage covers the cost of crucial services performed by the decedent. It is intended to replace certain services necessary to run the household such as cooking, garden upkeep, and maintenance. 

Proof of Income

Most states require that the survivors produce proof of the real value of the loss as a result of the death of the decedent. In a number of states, benefits are only paid if the decedent was employed. However, this payment may be subjected to termination if it’s evident that the decedent was about to lose wages before his or her death. 

Unemployed decedents do no qualify for this benefit. Some states may allow retired and disabled insurees to receive benefits if their wage loss is uncertain.

Dependency Clause

In order to receive benefits under survivors’ benefits insurance plans, the claimant should be able to prove his or her dependency on the decedent/insuree. Most state laws consider a spouse or minor child as a dependent. 

In general,

  • Spouses are considered as dependents.
  • Minor children (biological or adopted) are considered dependents.
  • Adult children are not considered as dependents unless they have been depending on the decedent for financial support.
  • Cohabitants or individuals living together are not regarded as dependents for any reason.
  • Relatives, friends, and other family members are not classified as dependents in any case.

    read more: When You Are Responsible for the Car Accident

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